The Occupational Pension Schemes (Schemes that were Contracted-out) Regulations (Northern Ireland) 2016

Made: 4th March 2016

Coming into operation in accordance with regulation 1

The Department for Social Development makes the following Regulations in exercise of the powers conferred by the provisions set out in Schedule 1 and now vested in it[^f00001].

PART 1 — GENERAL

Citation and commencement

1

These Regulations may be cited as the Occupational Pension Schemes (Schemes that were Contracted-out) Regulations (Northern Ireland) 2016 and shall come into operation—

• (a) for the purposes of this regulation and regulations 2 to 24, on 6th April 2016, and

• (b) for the purposes of regulation 25, on 6th April 2019.

Interpretation

2

• (1) In these Regulations—

• “the 1993 Act” means the Pension Schemes (Northern Ireland) Act 1993[^f00002];

• “the 1995 Order” means the Pensions (Northern Ireland) Order 1995[^f00003];

• “the 1996 Regulations” means the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1996[^f00004];

• “the 2004 Act” means the Finance Act 2004[^f00005];

• “administrator” means the person resident in the United Kingdom having responsibility for the management of an occupational pension scheme or, in the case of an overseas scheme (within the meaning of regulation 6), the person who is appointed in accordance with section 270[^f00006] of the 2004 Act;

• “bereavement support payment” means the benefit described in section 29 of the Pensions Act (Northern Ireland) 2015 (bereavement support payment);

• “the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

• “the Contributions and Benefits Act” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992[^f00007];

• “section 5(2B) rights” are— rights to the payment of pensions and accrued rights to pensions (other than rights attributable to voluntary contributions)— under a scheme that was a salary related contracted-out scheme, orunder a salary related scheme, as defined in regulation 1(2) of the Contracting-out (Transfer and Transfer Payment) Regulations (Northern Ireland) 1996, that has never been a contracted-out scheme, following a transfer in accordance with regulation 9 of those Regulations,so far as attributable to an earner’s service in contracted-out employment on or after 6th April 1997, andwhere a transfer payment has been made (other than a payment made in accordance with regulation 10 of the Contracting-out (Transfer and Transfer Payment) Regulations (Northern Ireland) 1996[^f00010] (transfer payments in occupational and personal pension schemes in respect of section 5(2B) rights)) to such a scheme, whether before or after the second abolition date[^f00011], any rights arising under the scheme as a consequence of that payment which are derived directly or indirectly from—such rights as are referred to in paragraph (a) under another salary related scheme, orprotected rights under another occupational pension scheme or under a personal pension scheme attributable to payments or contributions in respect of employment on or after the principal appointed day where that transfer payment was made before the first abolition date[^f00012];

• “trustees” in relation to a scheme which is not set up or established under a trust, means the managers or administrators of the scheme.

• (2) For the purposes of these Regulations, 2 people of the same sex are to be regarded as living together as if they were civil partners if, but only if, they would be regarded as living together as husband and wife were they instead 2 people of the opposite sex.

• (3) For the purposes of these Regulations—

• (a) any person, government department or public authority who, under or by virtue of Part 1 of the Contributions and Benefits Act is, or is to be treated as, the secondary Class 1 contributor, is to be treated as the employer of the earner in respect of whom the Class 1 contributions are payable;

• (b) without prejudice to sub-paragraph (a), there is to be treated as the employer of a self-employed earner to whom a scheme that was a salary related contracted-out scheme applies any person (other than the self-employed earner), government department or public authority who makes or is liable to make payments towards the resources of the scheme in respect of the self-employed earner (either under actual or contingent legal obligation or in the exercise of power conferred, or duty imposed, on a Minister of the Crown, government department or any other person, being a power or duty which extends to the disbursement or allocation of public money).

• (4) Subject to paragraphs (5) and (6), the Interpretation Act (Northern Ireland) 1954[^f00013] shall apply to these Regulations as it applies to an Act of the Assembly.

• (5) Without prejudice to any other method of service authorised under section 24 of the Interpretation Act (Northern Ireland) 1954, the requirement to send any document under these Regulations may be met by sending it by ordinary post.

• (6) For the purposes of these Regulations and notwithstanding section 39(2) of the Interpretation Act (Northern Ireland) 1954, where a period of time is expressed to begin on, or to be reckoned from, a particular day, that day shall be included in the period.

PART 2 — GENERAL PROVISIONS RELATING TO SCHEMES THAT WERE SALARY RELATED CONTRACTED-OUT SCHEMES

Alteration of scheme rules

3

For the purposes of section 33(1)[^f00014] of the 1993 Act (prohibition on alteration of rules of schemes that were contracted-out unless alteration is of a prescribed description), the alterations which are prescribed are any alterations which are allowed by regulations 8 and 11.

Determination that an earner was in contracted-out employment

4

• (1) This regulation applies where—

• (a) an earner (“E”) has been in employment, during a period in which employment of the same description as E’s employment was contracted-out[^f00015], but E’s employment was not (apart from this regulation) contracted-out in relation to E, and

• (b) the Commissioners are satisfied—

• (i) that the employment was not contracted-out in relation to E solely because E was not, during that period, a member of the relevant scheme[^f00016], and

• (ii) that E, during that period, was not a member of that scheme solely because of inadvertence.

• (2) Where this regulation applies, the Commissioners may determine that E was in contracted-out employment by reference to that scheme during that period.

Provision of information

5

• (1) The Department or the Commissioners may give any information that they could give to the trustees of an occupational pension scheme, under section 152(1)[^f00017] of the 1993 Act (information for purposes of contracting-out), to the following persons—

• (a) an earner, or widow, widower or surviving civil partner of an earner, to whom the information relates;

• (b) the employer in relation to the contracted-out employment of an earner to whom the information relates;

• (c) any independent trade union recognised in relation to earners who are members of a scheme that was a salary related contracted-out scheme, and

• (d) any person who is or who, in the opinion of the Commissioners, is likely to become, responsible for paying guaranteed minimum pensions, or pensions in respect of section 5(2B) rights, in accordance with the pension scheme.

• (2) Paragraph (1)(c) is subject to the condition that the information to be given is either—

• (a) as to—

• (i) the total amount of the guaranteed minimum pensions to which it appears to the Commissioners that all persons entitled under the scheme (whether immediately or prospectively) are so entitled, or

• (ii) whether the scheme is liable in respect of any section 5(2B) rights, or

• (b) given with the consent of the earner, widow, widower or surviving civil partner to whom it relates, such consent being given in writing, or by means of an electronic communication in such form as the Commissioners may approve.

• (3) For the purposes of this regulation, “independent trade union” means an independent trade union which is recognised to any extent for the purpose of collective bargaining.

Overseas schemes

6

• (1) The rules of an overseas scheme are to provide—

• (a) that, if the scheme is wound up, the assets of the scheme are to be applied first towards satisfying the amounts of the liabilities mentioned in Article 73(4)[^f00018] of the 1995 Order (preferential liabilities on winding up) and, if they are insufficient to satisfy those amounts in full, then—

• (i) they are to be applied first towards satisfying the amounts of the liabilities mentioned in earlier sub-paragraphs of that Article before those mentioned in later sub-paragraphs, and

• (ii) where the amounts of the liabilities mentioned in one of those sub-paragraphs cannot be satisfied in full, all such liabilities are to be satisfied in the same proportions;

• (b) that not more than 5 per cent. of the current market value of the scheme’s resources are invested in a person who is an employer, or connected with an employer, in relation to the scheme if such investments are required to meet the liabilities specified in sub-paragraph (a) and the value of such investments is to be calculated and determined in a manner approved by the Commissioners, and

• (c) in respect of rights that have accrued as a result of contracted-out employment in the scheme in Northern Ireland, for revaluation of accrued rights in accordance with sections 79 to 82[^f00019] of the 1993 Act and for indexation of pensions in accordance with Articles 51 to 54[^f00020] of the 1995 Order.

• (2) In this regulation “overseas scheme” means an occupational pension scheme that was a salary related contracted-out scheme and that has its main administration outside the United Kingdom, but does not include a scheme that was contracted-out in the Isle of Man by virtue of satisfying section 9(2) of the Pension Schemes Act 1993[^f00022] as it had effect in the Isle of Man before the second abolition date.

Continuation of transitional arrangements for schemes that began winding up before 6th April 1997

7

Where a scheme that was a salary related contracted-out scheme began winding up before the principal appointed day—

• (a) regulation 37 of the Occupational Pension Schemes (Contracting-out) Regulations (Northern Ireland) 1985[^f00023] (priorities on the winding-up of a scheme) continues to have effect in relation to that scheme, and

• (b) the resources of the scheme must be sufficient to meet the liabilities specified in section 20(1)(c)[^f00024] of the 1993 Act (as it had effect on the day the scheme began winding up), such resources being calculated, determined and verified in a manner approved by the Commissioners.

PART 3 — ADDITIONAL REQUIREMENTS IN RELATION TO RIGHTS ATTRIBUTABLE TO CONTRACTED-OUT EMPLOYMENT ON AND AFTER 6TH APRIL 1997

Alteration of scheme rules

8

• (1) The rules of a scheme may be altered in relation to section 5(2B) rights only if—

• (a) following the alteration, the scheme provides benefits for the earner and for the earner’s widow, widower or surviving civil partner, in respect of the period of pensionable service to which the alteration relates, that are at least equal to the benefits that would have been provided by a reference scheme (within the meaning of section 8B(2)[^f00025] of the 1993 Act as it had effect immediately before the second abolition date);

• (b) the alteration is one to which the subsisting rights provisions (within the meaning of Article 67(4)[^f00026] of the 1995 Order) do not apply, by virtue of Article 67 of the 1995 Order;

• (c) the alteration is one that is not a protected modification or a detrimental modification (within the meaning of Article 67A[^f00027] of the 1995 Order) and the requirement in paragraph (2) is met, or

• (d) the alteration is a detrimental modification (within the meaning of Article 67A of the 1995 Order) and—

• (i) the actuarial equivalence requirements provided for in Articles 67C and 67D[^f00028] of the 1995 Order are met in relation to the proposed modification of those rights, and

• (ii) the requirement in paragraph (2) is met.

• (2) Subject to paragraph (3), the requirement is that the altered scheme is to provide for a pension to be paid to the earner’s widow, widower or surviving civil partner (referred to in this regulation as the “relevant survivor’s section 5(2B) pension”) that is at least as generous, either as regards the amount of the pension or as regards the circumstances in which it shall be paid, as it would have been before the alteration.

• (3) In relation to an earner who is in pensionable service under the scheme immediately before the alteration takes effect, the requirement in paragraph (2) is to be deemed to be satisfied if the relevant survivor’s section 5(2B) pension that the scheme would provide in respect of the earner if the earner left pensionable service immediately after the alteration is at least as generous as the relevant survivor’s section 5(2B) pension that the scheme would have provided in respect of the earner had the earner left service immediately before the alteration.

Payment of a lump sum instead of a pension

9

• (1) A relevant scheme[^f00029] may not provide for the payment of a lump sum instead of a pension that is attributable to section 5(2B) rights, unless the payment to be made is authorised under section 164[^f00030] of the 2004 Act (authorised member payments) and the payment is—

• (a) permitted by the lump sum rule in section 166[^f00031] of the 2004 Act and qualifies as—

• (i) a pension commencement lump sum for the purposes of paragraph 1[^f00032] of Schedule 29 to the 2004 Act;

• (ii) a serious ill-health lump sum for the purposes of paragraph 4[^f00033] of that Schedule;

• (iii) an uncrystallised funds pension lump sum for the purposes of paragraph 4A[^f00034] of that Schedule;

• (iv) a trivial commutation lump sum for the purposes of paragraph 7[^f00035] of that Schedule, or

• (v) a winding-up lump sum for the purposes of paragraph 10[^f00036] of that Schedule;

• (b) permitted by the lump sum death benefit rule in section 168[^f00037] of the 2004 Act and qualifies as a trivial commutation lump sum death benefit for the purposes of paragraph 20[^f00038] of Schedule 29 to the 2004 Act, or

• (c) made by a registered pension scheme (within the meaning of section 150(2) of the 2004 Act), is a payment that is described in Part 2 of the Registered Pension Schemes (Authorised Payments) Regulations 2009[^f00039] (commutation payments), and is made to or in respect of a member.

• (2) Where, under the scheme—

• (a) an earner qualifies for a lump sum payment on the ground of serious ill-health, and

• (b) the earner’s widow, widower or surviving civil partner qualifies for a pension (“a survivor’s pension”),

the scheme is to continue to provide for a survivor’s pension notwithstanding the payment of a lump sum to the earner.

Forfeiture of accrued rights

10

Article 90 (1)[^f00040] of the 1995 Order (no forfeiture of entitlement under an occupational pension scheme) does not prevent forfeiture of section 5(2B) rights under a relevant scheme if—

• (a) the person entitled to payments giving effect to those rights (“the pensioner”) is, in the opinion of the trustees of the scheme, unable to act by reason of mental disorder, and

• (b) there is provision in the scheme that requires that, in those circumstances, sums equivalent to those payments—

• (i) must be paid or applied for the maintenance of the pensioner, except in so far as they are not, in the opinion of the trustees, required for that purpose;

• (ii) may, in so far as they are not, in the opinion of the trustees, required for the maintenance of the pensioner, be paid or applied for the maintenance of any dependants of the pensioner, and

• (iii) must, in so far as they are not, in the opinion of the trustees, required for the maintenance of the pensioner or any dependant of the pensioner, be held by the trustees for the pensioner until the pensioner is again able to act, or if the pensioner dies before that happens, for the pensioner’s estate.

PART 4 — ADDITIONAL REQUIREMENTS IN RELATION TO GUARANTEED MINIMUM PENSIONS

Alteration of scheme rules

11

The rules of a scheme may be altered in relation to a guaranteed minimum under section 10[^f00041] (earner’s guaranteed minimum) or 13[^f00042] (minimum pensions for widows and widowers) of the 1993 Act only if the alteration ...—

• (a) would not—

• (i) affect any of the matters dealt with in Part 3 of the 1993 Act (schemes that were contracted-out etc. and effects on members’ state scheme rights), or any regulations made under that Part, that relate to guaranteed minimum pensions, in a manner that would or might adversely affect any entitlement or accrued rights of any member of the scheme acquired before the alteration takes effect;

• (ii) affect any of the matters dealt with in sections 83 to 88 of the 1993 Act (protection of increases in guaranteed minimum pensions) or sections 105 and 106 of the 1993 Act (annual increases of guaranteed minimum pensions) or any matters dealt with in regulations made under any of those provisions, or

• (b) is made for either or both of the purposes referred to in regulation 7C(1) of the Occupational Pension Schemes (Modification of Schemes) Regulations (Northern Ireland) 2006 (modification of schemes: revaluation of guaranteed minimum pensions).

Circumstances for the purposes of section 13(6) of the 1993 Act in which widower’s or surviving civil partner’s guaranteed minimum pension is payable

12

• (1) In addition to providing for a widower’s, widow’s or surviving civil partner’s pension to be payable in the circumstances specified in section 13(4A)[^f00046] of the 1993 Act (minimum pensions for widows and widowers), a scheme that was a salary related contracted-out scheme is to make provision for such a pension to be payable if—

• (a) the widower , widow or surviving civil partner and the earner were both over pensionable age when the earner died;

• (b) the widower , widow or surviving civil partner is either residing with a child, or is entitled to child benefit in respect of a child, who is—

• (i) a child of the widower , widow or surviving civil partner and the earner;